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Attawapiskat First Nation Chief Theresa Spence has fired off a lengthy letter denying the accusation made Thursday by Aboriginal Affairs Minister John Duncan that her council is refusing to release information the government-appointed third-party manager needs to begin paying the community's bills.

In her letter dated Jan. 5, Spence repeats her demand that $1.5 million in operational funds be released to her council so the community can meet its payroll and other ongoing expenses.

Attawapiskat Chief Theresa Spence has fired back at the Department of Aboriginal Affairs in a tersely worded letter. (Canadian Press)

The government-appointed manager, BDO Dunwoody, is refusing to pass on the federal funding. It interprets its contract with the federal government to provide third-party management as meaning it should now make payments on behalf of Attawapiskat.

Spence repeated her view that the third-party manager is not welcome in the community. However, the chief did say staff from Duncan's department were welcome and the council and its previously appointed co-manager are willing to co-operate with an audit of the First Nations' finances scheduled for the week of Jan. 16.

"Why should my First Nation be paying $1,300 a day for some firm to issue payroll cheques for my First Nation with our all ready [sic] limited band support funding, if the supposed purpose was for the third-party manager to attend to the housing crisis?" Spence writes.

Spence accused the minister of failing to focus on Attawapiskat's housing emergency and instead taking a "divide and conquer" approach to taking over its finances, which "decimates their finance and administration staff in due course with no consultation with council."

"All this rhetoric about the least disruption and [as] short a term as possible is all politics," Spence writes, damning the third-party manager as an effort to "subdue and take away local autonomy."

Grand Chief Stan Louttit, regional chief for the area that includes Attawapiskat, echoed Spence's call for the $1.5 million to be released.

"Our idea all along has been ... let's reinstate the autonomy of the Attawapiskat First Nation," Louttit told host Rosemary Barton on CBC-TV's Power & Politics Friday. "Let's not have some other government impose itself on this government by appointing an Indian agent to run our business."

A spokesperson for Duncan's office defended the third-party manager Friday, crediting him with the purchase of 22 modular homes that have begun to make their way to the remote community, and for supporting efforts to retro-fit a healing lodge and trailers being used as temporary housing.

Moira Wolstenholm told CBC News that department officials have advised Spence they are prepared to go into the community as early as Monday to help expedite preparation of sites for the new homes. Wolstenholm repeated the government's claim made Thursday that it is waiting on information from the band council in order to issue payroll cheques for essential services, such as teacher salaries.

Louttit said the community will not provide the information because to do so would be to recognize the legitimacy of the third-party manager.

The principal for the reserve's elementary school says so far her teachers are still getting paid, the CBC's Allison Dempster reported.

Housing crisis sparked state of emergency

Spence declared a state of emergency on Oct. 28 for the First Nations community near the shore of James Bay, and video footage from the community has shown families, including young children, living in decrepit shacks or previously condemned homes without adequate heating or running water.

Other residents in the isolated community of 1,800 live crowded into trailers, originally intended to be only temporary homes for displaced families, that resemble shipping crates.

In her letter Friday, Spence writes extensively about recent efforts to improve administration in the community under co-management, lauding the council's decision to "seek a more rooted presence of a co-manager in this community."

The previously appointed co-manager for Attawapiskat has been linked romantically with Spence.

The chief also accuses the minister of trying to portray his department and BDO Dunwoody as the "saviour" of Attawapiskat.

"Tell me where the trust is? [Your] apparent tactic in withholding our normal operational funding is a means of forcing us to be compliant and be silent on the disparencies that exist in my First Nation due to shortfalls in your department's policies," Spence wrote.

"We have learned from our mistakes of the past," Spence says on the letter's last page. "Now you have taken that away."